Editor's Note: Reality Check | B.C.'s carbon tax

CBC

A recent CBC News Reality Check election report tackled the complex subject of carbon tax, and specifically the extent to which the B.C. Liberal government's 6.67-cent-per-litre-tax on gasoline has had an impact on reducing B.C.’s fossil fuel consumption and emissions.

This story generated a wide variety of responses, some of which questioned our research and our conclusion and that is why we are following it up.

While the New Democrats now support the carbon tax and plan to expand it to include vented emissions from the oil and gas industry, they differ from the Liberals on where carbon tax revenue should go.

The legislation that established the carbon tax under the Liberal government mandates all revenue must go to corporate and personal income tax cuts and a low-income tax credit.

NDP Leader Adrian Dix, on the other hand, is promising to put the money towards “environmental initiatives, green initiatives such as transit.”

As part of our Reality Check segment, our team decided to assess whether the tax itself could be considered an environmental initiative.

Given the responses to this story, it seems clear that more detail about the research on consumption and emissions, including the analysis and methodology used by different organizations to measure these things, would be useful to our readers.

Reality Check Re-check

The goal of B.C.’s carbon tax is to reduce emissions from fossil fuel consumption. By increasing the cost of burning many fossil fuels, the government says it is “providing an incentive” to change behaviours of consumers and businesses.

The difficulty comes in how to determine whether people have changed their behaviour as a result of the carbon tax.

Many other factors affect fuel use, including the economy and the weather, and perhaps the biggest challenge is not knowing what would have happened in B.C. without the tax.

However, several studies have looked at how fuel use has changed in B.C. since the tax was first brought in on July 1, 2008 — and it is worth comparing their conclusions.

Fuel consumption down

Two studies out of the University of Ottawa present arguments that the carbon tax has reduced fuel usage in B.C.

The first was released in June 2012, by the U of O-based think-tank Sustainable Prosperity. The authors used Statistics Canada data to compare fuel use in B.C. to other provinces — looking only at the fuels that are subject to the carbon tax.

It found that between 2008 and 2011, consumption of those fuels on a per-capita basis declined in B.C. by 15 per cent. Per-capita sales of gasoline for vehicles also declined, by 4 per cent.

Those declines could be caused by a number of factors — including the economic downturn. The authors argued the recession would have the same impact across Canada, so they looked to see whether fuel use also dropped elsewhere.

Because the same decrease did not happen in the rest of Canada, the authors argued B.C.’s carbon tax “has contributed substantial environmental benefits to B.C.” However, it’s unknown whether the economic downturn did affect all provinces equally, or whether other policies besides the carbon tax contributed to changing behaviour.

Sustainable Prosperity has argued for years in favour of the carbon tax. The lead author of the study, Stewart Elgie, is a professor at the University of Ottawa’s Faculty of Law and previously founded the Sierra Legal Defence Fund, which is now EcoJustice.

Gas demand down?

The second U of O study is by environmental economists Nicholas Rivers and Brandon Schaufele.

It was submitted in a draft form to the B.C. government’s carbon tax review in 2012.

The authors tried to determine which part of the drop in gasoline sales in B.C. could be attributed to the carbon tax.

They used economic models to compare actual sales to alternate scenarios where the tax didn’t exist.

They concluded the carbon tax affected gasoline demand more than an equivalent price fluctuation would — because of how some people perceive taxes.

Gas use up in rural areas?

The Canadian Taxpayers Federation submitted its own analysis to the province’s carbon tax review — also using government records of gasoline use — to argue against keeping the tax.

It noted gasoline use had increased faster than population in rural areas of B.C. — Fort St. John, Dawson Creek, Sparwood — where drivers don’t have public transit or other transportation alternatives.

It stated “the B.C. carbon tax has been a failure indeed,” using Statistics Canada data to show gasoline sales had grown 4.3 per cent between 2007 and 2010.

Why did the CTF come to a different conclusion than Sustainable Prosperity, using the same source of information?

The Taxpayers Federation didn’t account for B.C.’s five per cent population growth over that time; per capita sales did decrease over those years.

Conclusions questioned

In conclusion, it would be hard to state definitively that B.C.’s emissions and fossil fuel consumption are down as a result of the carbon tax, because of the difficulty in attributing any change in fuel use to one specific policy.

All of the above groups have made submissions to the B.C. government’s carbon tax review, and while Sustainable Prosperity has long argued for a carbon tax, the Taxpayers Federation has long argued against it.

None of the studies described have been published in peer-reviewed journals.

The B.C. government released its own review of the carbon tax in February 2013, in the provincial budget.

It concluded the tax would continue, given public support and a small negative impact on GDP, but did not comment on how effective it had been in reducing GHG emissions.